Question: 27 Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for

Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years (in millions)

Year

Revenues

Operating expense

Depreciation

Increase in working capital

Capital expenditures

Corporate tax-rate

1,025

400

230

250

20%

1,400

550

260

300

20%

The depreciation tax shield for Shepard Industries project in year 1 is closest to:

A. $52
B. $69

O c. $55

O D. $46

27 Shepard Industries is evaluating a proposal to expand its current distribution

facilities. Management has projected the project will produce the following cash flows

The dapenciabion tax ahield for shepard industries profect in year 1 is closeat to. A. $52 D. 569 c. 585 D. $4 A. $52 B. $69 C. $55 D. $46

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